Burberry: Brand Profile

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Designer label Burberry was rescued from the dusty discount bin in the late 1990s and early 2000s, and transformed back into a major fashion brand, before being successfully spun off by owners GUS plc as a separate company. Rose Marie Bravo, the CEO who masterminded Burberry's resurrection and quadrupled its sales, stepped down in 2006, but Burberry has retained its momentum. It is one of the very few distinctively British designer fashion labels. However, in an environment now dominated by multi-brand luxury groups, how long can it remain independent? Rumours of acquisition surface periodically. though so far none has materialised for real.

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Recent stories from Adbrands Weekly Update:

Adbrands Weekly Update 2nd Nov 2017: Christopher Bailey announced plans to resign as chief creative officer of Burberry in March next year, though he will stay with the group until the end of 2018 to assist with transition to a new lead designer. Bailey surrendered the role of CEO earlier this year to new recruit Marco Gobbetti.

Adbrands Weekly Update 6th Apr 2017: Cosmetics juggernaut Coty also added to its collection, acquiring rights to Burberry's fragrance and beauty portfolio. The British fashion group has been producing these products inhouse since it bought them back from InterParfums four years ago. Coty will pay £50m for Burberry beauty's inventory and assets, plus a global license fee of £130m. The business generated revenues of just over £200m last year.

Adbrands Weekly Update 8th Dec 2016: UK luxury brand Burberry has rejected a succession of takeover offers from its US rival Coach, which is seeking to evolve into a multi-brand group. No details have been disclosed of the offers, but it's reported that talks have ended and are unlikely to resume. Burberry's current market value is a little over £6bn while Coach is trading around $10bn.

Adbrands Weekly Update 3rd Nov 2016: Ads of the Week: "The Tale of Thomas Burberry". Fashion group Burberry has really pushed out the boat for this lavish film telling an emotionally heightened version of the life of founder Thomas Burberry. We're certain the real TB's life wasn't quite as "Downton Abbey" as this trailer-style treat, but frankly who cares when the results are as handsome or as star-packed as this. Suspend your disbelief for 3 minutes. Fine work from director Asif Kapadia, better known for documentaries (Amy, Senna) not period drama. And boy is there plenty of drama here. Faintly ridiculous of course, but compelling nonetheless.

Adbrands Weekly Update 14th Jul 2016: Burberry chief Christopher Bailey will relinquish the role of CEO to Marco Gobbetti, who is set to join the British fashion company from French rival Celine, owned by LVMH, though not until some time next year. Bailey will remain chief creative officer, but will side-step into a new role as group president, working alongside Gobbetti. As financial performance has waned over the past year, Burberry has come under growing pressure from investors over Bailey's unusual split role straddling both the creative and commercial sides of the business. The group also announced the appointment of a new CFO, Julie Brown, to replace longserving incumbent Carol Fairweather. As a result of poor performance last year, none of Burberry's existing management team is to receive a bonus.


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Background

Free for all users | see full profile for current activities: Thomas Burberry opened his outfitter's shop in Basingstoke, Hampshire in 1856, at the tender age of 21. Trading was modest for the next few years, but after his two sons joined the business in the 1880s, Burberry made plans to open a second shop in London. He sold the license to RB Rolls, who opened a Burberry shop in London's Haymarket in 1891, in partnership with the family company. 

At around the same time, Burberry was perfecting a tightly woven weatherproofed yarn that could be used to make clothing that was strong and rainproof without also being hot. He called the new fabric 'gabardine', and began making raincoats from it in around 1900. To manage the increased production the company built new fabric mills, and gradually began exporting its clothing abroad through wholesalers in North and Latin America. The group adopted its equestrian knight-in-armour trademark in 1904, and the first international retail outlet was opened in 1909 in Paris. A huge step forward came when Burberry was commissioned to design the standard uniform for officers at the outset of the First World War. This included an adaptation of his standard gabardine raincoat, which became known as a 'trench coat', and enjoyed increasing popularity after the war. It was favoured initially by explorers and other outdoor pioneers: Roald Amundsen was equipped by Burberry for his expedition to the North Pole in 1911; Alcock and Brown were wearing Burberry trench coats on their first manned flight across the Atlantic in 1919. Less pioneering shoppers also adopted the style in a bid to appear more heroic in everyday life. In 1920, Thomas Burberry & Sons Ltd was floated on the London Stock Exchange. The famous Burberry check in camel, black, red and white was first introduced as a lining for the company's rainwear in 1924. 

Thomas Burberry died in 1926, but his second son Arthur Michael Burberry continued to run the business until 1951. By this time, Burberry trench coats had reached record levels of popularity as a result of their use by Humphrey Bogart and Ingrid Bergman in Casablanca and subsequently by Audrey Hepburn in Breakfast at Tiffany's. In 1955, in the year that it received its first Royal Warrant from the young Queen Elizabeth II, a controlling stake in the company was acquired by Great Universal Stores, and it became a wholly owned subsidiary in 1966. The business eventually came under the control of chief executive Stanley Peacock during the 1980s. He oversaw the extension of the company's licenses into the developing tourist market, boosting sales in the medium-term, but with an inevitable long-term effect on the brand's status. In 1996, this threat was immediately apparent to the newly appointed chairman of GUS, Lord Wolfson of Sunningdale, widely credited as the man who had built up high street retailer Next during the 1980s and 1990s. Wolfson placed the business under the control of his cousin, Victor Barnett, who set about recruiting a new chief executive to replace Stanley Peacock, who retired in 1996. 

Rose Marie Bravo's brief was to duplicate the seemingly miraculous turnaround managed by Tom Ford and Domenico de Sole at Gucci, whereby a once legendary brand was resurrected from Eurotrash status to become a fashion icon. However, her first moves proved both expensive and controversial. Shutting down the supply to the Japanese "grey market" as well as the company's low-priced lines cost almost £17m in inventory, and had an immediate and dramatic effect on sales, already hard hit by the sudden economic slowdown in the Far East. In the year to 1998, sales dropped 7% to £255m, while profits plummeted 60% from £62m to £30m. The financial markets punished GUS for the slump by marking down the group's share price heavily. The situation got still worse a year later as sales dropped to £207m, while profits slipped below £11m. Analysts advised GUS to sell the brand for whatever it could get, but Wolfson stood behind his new CEO.

In the year to March 2000, the results of Bravo's work began to feed through as sales rose to £230m, and profits more than doubled to £22m. A few months later GUS paid E209m to take control of its licensee in Spain, the brand's second largest country of operation behind Japan. The sheer scale of the brand's recovery was unveiled in 2001, when the group reported superb financial results for the year. Sales nearly doubled to £425m, while profits tripled to a record £69.5m. The brand extended its market still further with the launch of a first menswear collection, including jeans featuring the trademark check pattern. New Burberry stores opened in Los Angeles, Duesseldorf and Barcelona, while others were lavishly renovated. In 2002, the company took back full control of its Asia-Pacific distribution, previously handled through agents and licensing agreements. In June that year GUS floated 22.5% of its shareholding in Burberry, valuing the business at around £1bn. A further 10% stake was sold in 2003, and the remaining shares were spun off to GUS shareholders at the end of 2005. 

In September 2006, the group became the target of angry protests in the UK when it announced plans to close its factory in Wales with the loss of 300 jobs. Although this seemed in itself only a small story at the time it proved to be surprisingly long-lasting, leading to public letters from various Welsh celebrities arguing against the closure; protests outside several of the company's flagship stores as far away as Paris, Strasbourg and New York; and even a last-minute offer by Harrods owner Mohammed Al Fayed to save the factory. Bizarrely the story was still making headlines six months later in March 2007. See full profile for current activities


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